Which of the following conclusions are correct?
A) Most of the volatility of the dollar value of the British asset can be removed by hedging exchange risk because b2[Var(S) ] and Var(e) are 236,717 ($) 2 and 493,751 ($) 2 respectively.
B) Most of the volatility of the dollar value of the British asset can not be removed by hedging exchange risk because b2[Var(S) ] and Var(e) are 236,717 ($) 2 and 493,751 ($) 2 respectively.
C) Most of the volatility of the dollar value of the British asset can NOT be removed by hedging exchange risk because b2[Var(S) ] and Var(e) are 125,000 ($) 2 and -127,500 ($) 2 respectively.
D) Most of the volatility of the dollar value of the British asset can be removed by hedging exchange risk because b2[Var(S) ] and Var(e) are 125,000 ($) 2 and -127,500 ($) 2 respectively.
Correct Answer:
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